What Does Standard Risk Mean?
A standard risk refers to an insurance risk that an insurance company's underwriting standards considers common or normal. Therefore, it would qualify for standard premium rates without special restrictions or extra ratings. On the other hand, a non-standard risk would receive or lose "points" based on the degree to which it differs from a standard risk, and this would affect the premium pricing.
Insuranceopedia Explains Standard Risk
For example, a healthy, non-smoking, young adult would likely receive standard premium pricing for a life insurance policy, while a smoker with a family history of terminal illnesses may be considered a substandard risk and would likely pay much more for the same type of policy. The specific circumstances, history, or habits of each individual determines whether they are considered a standard or non-standard risk, which ultimately affects their insurability and premium rates. Those who represent a lower risk can typically expect to pay less for the same insurance coverage as a person who represents a higher risk.